Study: Medicine Advances as State Health Care Declines

Recent advancements in medicine and life-saving technology don't do much to help sick patients who can't take advantage of them because of cash-strapped state health care programs, resulting in "first-rate medicine and a third-rate health care system," a comprehensive new study found.

The year-long study of government-funded health care in the 50 states was done by Governing magazine with support from The Pew Charitable Trusts, which separately also funds Stateline.org.

"Clearly, there is a health care crisis in America, but it is in no way a medical crisis. It is a fiscal crisis," said the report titled: "A Case of Neglect: Why Health Care Is Getting Worse, Even Though Medicine Is Getting Better."

Governing focused on six major areas of health care funded by state dollars: mental health, public health, long-term care, children's care, prescription drugs and the growing number of uninsured. Across the board, the study found improvements in modern medicine, but a decline in access to it for needy populations that depend on the safety net of public health programs.

"Over and over again it became clear that the dollars involved are huge and that the essential problem here is a fiscal one. If there were endless dollars available, there would be no health care problem in this country," Richard Greene, one of the study's three authors, told Stateline.org in an interview.

Medicaid is at the heart of problem, the report said. The state-federal health insurance program for nearly 50 million poor and disabled Americans is the second biggest item in state budgets and accounts for 20 percent of state spending. In 2002, state and federal Medicaid expenditures came to $258 billion, accounting for about 17 percent of all hospital care, 17 percent of prescription drug spending and nearly half of all nursing home care.

"A lot more attention should be focused on (Medicaid)," said Katherine Barrett, another of the study's authors. "It's just such a huge amount of money and such a huge amount of each state budget, and the states really are stuck."

States recently faced their biggest budget shortfalls in decades even as health care costs have soared. In an effort to slow Medicaid growth, which dropped to 9.3 percent in 2003 from 12.8 percent in 2002, all 50 states over the past two years have taken steps to control Medicaid costs by reducing or freezing Medicaid provider payments, cutting benefits such as vision or dental care or restricting the prescription drugs Medicaid patients can receive.

Greene said the big cuts that states are making to health care programs might make short-term financial sense but can hurt people and don't make long-term sense.

The study's basic findings were:

  • Public health Bio-terrorism is of paramount concern to public health officials and is monopolizing a large portion of state and federal public health funds. In addition, public health is under-funded across the board. Many states have resorted to cutting back programs and services, from anti-smoking campaigns to teen-pregnancy prevention.
  • Mental health Advancements in psychotropic drugs help many mentally ill Americans leave institutions and enter their communities. But high drug costs and an overburdened community care network leave many without assistance. Patients often turn to already-strained acute care hospitals or end up on the streets. An estimated one-third of homeless adults suffer serious mental illness. 
  • Long-term care One of the biggest drains on state Medicaid budgets is long-term care. With the impending retirement of the Baby Boom generation, states are concerned more than ever with that looming expense. Nursing home care already costs states more than $20 billion a year, and community-based care for the elderly or disabled costs an additional $8 billion. 
  • Children's care Children are the least expensive patients, but that didn't protect them from states' budget axe. Many states are scaling back coverage, even though keeping kids healthy is a cost-saver in the long-term.
  • Prescription drugs Almost every state is trying to rein in the rising cost of prescription drugs, especially for Medicaid patients. State spending on pharmaceuticals jumped more than 18 percent between 1997 and 2000. State efforts to reduce costs have been challenged by the drug industry at every turn, and the success of cost-containment measures is unclear. 
  • Insurance coverage The ranks of the country's uninsured have swelled to more than 44 million, and most states' attempts to cut that number have been only slightly successful. The economic downturn of 2001 and growing unemployment have left even more people without insurance and reliant on state aid.


Governing looked at health care in all 50 states but did not rank or grade each state's performance. Instead, it highlighted "success stories" and "trouble spots." Several states appear in both categories.

Colorado, for example, was targeted for stripping all state funding $500,000 from its childhood immunization program. Colorado still receives federal dollars for childhood vaccines, but it has the worst immunization rate for children in the country, the study pointed out.

Cindy Parmenter, spokeswoman for the Colorado Department of Public Health and Environment, told Stateline.org that every state agency endured budget cuts. "Certainly, those kinds of cuts are very difficult to make and they're very difficult decisions. But they're decisions that have to be made by states that must operate on a balanced budget," she said.

Parmenter said Gov. Bill Owens (R) has allocated $500,000 in one-time federal money to the program this budget cycle and is hoping the legislature will come up with some extra state dollars. "We're really working hard now to reinstate money to get that program back in line," she said.

Governing singled out other states as needing improvement:

  • Kentucky cut long-term care benefits to more than 1,400 elderly citizens. Now there's a 3,000-person waiting list for state-funded elderly home care.Massachusetts, which had one of the most effective smoking prevention programs in the country, slashed anti-tobacco programs to $2.5 million from $48 million. 
  • South Carolina last year kept 70 people in jail who couldn't get access to court-ordered treatment. The state's mental health director blamed staff and bed shortages, but the state Supreme Court ruled that the department had to find room for the patients.
  • Texas dropped into last place in health insurance coverage, with the biggest percentage of uninsured adults in the nation.
  • Alabama, Colorado, Florida, Montana and Utah froze enrollment in their state Children's Health Insurance Programs and are making thousands of kids wait for coverage. Montana, though, said it no longer belongs on the list because Gov. Judy Martz (R) gave CHIP an additional $609,000 in late October, eliminating the state's 1,300-child waiting list.


Among the success stories:

  • Maine was lauded as the "state to watch" in 2004 for its new "Dirigo" program that aims to provide the widest-reaching health insurance coverage in the country. Its new prescription drug program is novel because it uses the state's Medicaid buying-power to extend discounts to low-income, non-Medicaid patients. 
  • Nevada answered the state's hospital bed shortage by boosting its mental health department budget 31 percent to pay for a new state hospital with 150 additional beds and mobile mental health units.
  • Minnesota has the lowest rate of uninsured adults in the nation followed by Delaware and Iowa. The report said that although a program to insure childless adults was pared back in 2003, Minnesota maintains a strong safety net. 
  • Michigan and Vermont launched the first joint bulk-buying pool for prescription drugs, using their combined Medicaid populations as leverage to negotiate lower prices from drug makers.
  • Alabama runs a good, statewide children's dentistry program.

 The report is published in the February issue of Governing magazine.